As an Immigration Attorney, my primary goal is to prepare the most approvable immigration petitions and applications possible.
For business immigration processes like the E-2 investor visa, the L-1A intracompany transferee (manager/executive) visa, and the EB-5 Immigrant Investor (green card through investment and job creation) visa, one of the biggest hurdles is the business itself.
Each of these processes allow an investor or entrepreneur to create a U.S. business from scratch. Often, I see foreign investors struggle with employment creation. Going from 1 employee (the investor or transferred executive) to 10, 15, or more in 12 months is an incredible challenge.
Other times, the startup costs are a hassle. For a brand-new business, what should an investor spend money on? How much of a total investment is best?
Franchises are an option I give to my clients, as they offer several advantages. Here, I’ll discuss how they can benefit an E-2, L-1A, and EB-5 applicant.
E-2 Investor Visas and Franchises
The E-2 visa is for foreign investors from certain countries who will make a substantial commitment of funds (the investment) to a new or existing U.S. business that will allow the investor to earn a living for him or herself and family.
An E-2 visa is valid for 5 years and allows the investor to live in the U.S. for up to 2 years at a time, extended each time the investor enters the U.S.
Better still, the visa can be renewed indefinitely after showing continued investment into the business.
A franchise accomplishes a few things:
- Easy to understand investment amount – when applying at the U.S. Consulate (as most E-2 applications go), the Consulate officer has to review if the amount of funds invested were “substantial,” an undefined term. A franchise usually has a specific purchase price, which is very easy for the officer to understand, and as many franchises are at least $150,000, most officers will consider this “substantial.”
- Funds are COMMITTED – instead of patching together premises costs, equipment costs, etc., a franchise investment is a one-shot investment
- Trust in a trust account – because a business purchase is involved, most consulates allow the purchase amount can be placed in trust conditioned upon visa approval
- Employment creation – the support of a franchise system may make it easier to add more U.S. employees
- Business viability – instead of a purely speculation-based business plan, a franchise support system can show the Consulate officer that the business has a better likelihood of future success.
L-1 Managers or Executives and Franchises
The L-1 visa is for foreign businesses seeking to transfer a manager or executive level employee to a United States subsidiary or affiliate.
This process is often used for entrepreneurial purposes, with the owner of the foreign business transferring himself to the United States to start U.S. operations.
While an investment is not the focus, the key to L-1 is the managerial or executive role. USCIS has essentially turned this into a head count: if there are enough management or supervisory level employees, and enough staff to support them, then the L-1 beneficiary will have a better chance at success.
A franchise model allows for more support of more employees at the management and lower-level staff positions, making it easier to justify the beneficiary’s executive or managerial role.
In addition, the L-1 is initially granted for only one year, at which point the company must justify the continued U.S. employment of the foreign executive or manager.
For many new businesses, it’s difficult to add enough staff in one year to justify the executive or managerial role, but with a franchise and the support available, it may be easier to grow sufficiently to get the extension of L-1 status.
EB-5 Immigrant Investor and Franchises
The EB-5 Immigrant Investor visa requires a USD $500,000 investment and the creation of 10 full time jobs for U.S. citizens or permanent residents and gives the foreign investor permanent residency (green card).
The most popular format of EB-5 investment is through a “regional center,” which is a U.S. business with permission from USCIS to pool large numbers of foreign investors for large projects and can also count not only the jobs created within the investment project, but those jobs created indirectly through the influx of capital into the area.
These investments require little of the investor in regard to actively managing the business, instead having the investors serve is a more “board of directors” capacity.
However, the EB-5 Regional Center is in a state of flux, without permanent authorization and subject to short term extensions (more than a dozen since 2015!).
Fortunately, the “direct” EB-5 program remains available to investors, but many are turned off by the more active management requirement and having to create 10 jobs “in house” instead of relying on economic benefits indirectly.
With a franchise, however, the investor can rely on support from the franchisor to help manage the business, instead of being left alone to deal with a new U.S.-style of business.
In addition, because of the systems in place, it may be much easier to create the 10 jobs.
For the right investor or entrepreneur, looking to a franchise for your L-1, E-2, or EB-5 process can have some immigration benefits that should seriously be considered.
The material contained in this article does not constitute direct legal advice and is for informational purposes only. An attorney-client relationship is not presumed or intended by receipt or review of this presentation. The information provided should never replace informed counsel when specific immigration-related guidance is needed.
About the Author:
Sal Picataggio has practiced immigration law since 2011, where he focuses his work on business immigration processes for investors, business owners, and entrepreneurs. EB-5 Investors Magazine named Sal as a 2019 EB-5 Rising Star, and he is a proud member of AILA (Central Florida Chapter), Orange County Bar Association Immigration and Nationality Committee, Orlando Regional Realtor Association Affiliate and Global Real Estate Council, and the British American Chamber of Commerce.